It’s a $60 billion error.
After touting the impact of the $130 billion JobKeeper package —supposedly keeping about 6.5 million Australians connected to their employers while providing them with liveable pay — the Federal Government has acknowledged its figures were massively overstated.
How a confusing JobKeeper form made the coronavirus job crisis look worse than it actually is
The package is instead projected to cost only $70 billion, and the Government has confirmed only 3.5 million Australians are actually receiving the payment.
It’s a huge difference from what was projected, but it comes down to about 1,000 businesses messing up their paperwork while applying for the scheme.
Here’s what happened.
One employee or 1,500?
As with any application for government help, applying for the JobKeeper payment involves paperwork.
More than 910,000 businesses have applied for the scheme, with 759,000 having already finalised their employee declarations, meaning they are eligible to receive payments.
But some of those businesses, it seems, made mistakes while filling out their forms.
According to the Australian Tax Office (ATO), which is responsible for administering JobKeeper payments, the errors weren’t picked up because its focus was on processing payments as quickly as possible.
One of the most common mistakes noted by the ATO was businesses mixing up the number of workers they employed with the amount they expected workers to receive.
For instance, 550 businesses with just one eligible employee filled out the corresponding section of their forms with “1,500” — presumably in reference to the $1,500-per-fortnight payment made to all eligible workers.
The Australian Government’s predicted number of people being supported by JobKeeper was overstated because of employers incorrectly filling out forms.(Australian Government: Jobkeeper)
Those 550 businesses would have been responsible for an additional 825,000 people being added to the scheme — people that did not exist.
But the ultimate discrepancy between the projected and actual number of people on JobKeeper was about 3 million.
That still leaves a difference of more than 2.1 million people between the actual numbers and what was initially projected.
When the Government first announced the JobKeeper scheme, it said it would cost $130 billion and help about 6 million employees. Those numbers were based on Treasury estimates on the projected need for the scheme.
First estimates of the cost of the program were formulated at the height of the coronavirus crisis, with Treasury fearing the health impacts would be severe.
As businesses began to register their interest in signing up for the scheme, the numbers appeared to be in line with initial estimates.
But Treasurer Josh Frydenberg said on Friday that the economy was doing better than Treasury initially estimated and as a result, fewer people were signing up for JobKeeper.
Confusing question may be to blame
The 1,000 businesses responsible for the error represent just over 0.1 per cent of the 910,000 businesses that have registered for JobKeeper.
But the $60 billion reduction in the projected cost of the scheme suggests that small portion was receiving nearly half the money allocated to the scheme.
ATO Second Commissioner Jeremy Hirschhorn said it appeared those applicants misunderstood the question on their application forms.
“With hindsight, perhaps the form could have been more straightforward, however I do note that only 1,000 of the 900,000 misinterpreted the question,” he said.
He said that no extra money was paid to businesses, as the question that was misunderstood by some was not linked to payments.
“We ask a question for analytical purposes only, not for payment purposes,” he said.
“It made not one difference to the amount we paid.”